Of all the threats that face your business, employee theft is one of the most challenging to contend with. Often referred to as embezzlement, internal theft may go on for years and have a lasting financial impact on a small business and its owner. To ensure you can protect your enterprise from unscrupulous employees, The Balance offers the following information.
While embezzlement can take on many different forms of, the crime typically has four elements. First, both parties must be connected by an asset which both are expected to exercise some level of care towards. Next, the person being charged must access this asset via this connection, usually as an employee. Third, the person accused of embezzlement must take ownership of the asset, and fourth, intent to take ownership must be established.
For example, a retail worker may take items off the shelves without paying. Embezzlement can also be more complex, as in the instance of a payroll employee collecting taxes but keeping the money. An employee may even enlist the help of friends or family to share in the proceeds of their crime or a person overseeing another party’s funds can use them for his or her own gain.
While you can’t always prevent employee theft, there are steps you can take to discourage it. Set standards in place for those with access to company funds. Make sure these employees know that their actions will be monitored, as this can act as a deterrent. Additionally, make sure any financial transactions involving cash are always recorded. It also helps to have third parties review payroll and accounting figures to make sure nothing is amiss.